Indian investment options over the past two years have seen a paradigm shift from traditional investments to the Crypto space. This article aims to understand general trading psychology of us, Indians; who often trip over our own shoes, breeding high expectations of making quick profits in this space.
The First Flaw
All of us enter the crypto space wondering where to start and often find ourselves relying on someone else’s advice. However, having no prior knowledge, we wind up owning their decision for our investment option.
So what do we buy?
There is so much clutter in terms of coin numbers that many of us do not even know what they are, and rely heavily on YouTube astrology. What we fail to understand is that this is not rocket science and we all are gifted enough to be intuitive ice breakers. A little research and probing will add zest to our financial decision making. Based on our risk appetite and quantum of investment, we can make sure to invest in coins/tokens across the board from currencies, adult content, privacy, cloud computing, dApps, platforms, ecosystem etc. If still unsure of what goes in where, reaching out to those who can help you or looking at certain Copy Funds from sites like etoro would be of some help.
Having seen the way conventional business and stocks operate, Bitcoin as such has an accrual protocol value but not a tangible asset value, this is where the scum ball theory comes in; apart from speed, decentralised, tamper proof data analytics, it is still to prove intrinsic business value with mass social adoption.
This explanation is necessary as it would give us prudent insights into choices we make with our investment on what to buy. After all, Crypto really has to prove its adoption.
As they always say: DYOR – Do Your own Research
Having Identified the What, the Question now is – When to Buy?
Nothing is a wrong to buy as long as you know the entry/exit strategy; we repeatedly hear buy in dip or sell on moon, but can anyone tell us what exactly is a dip and where does the moon lie? The answer is NO, and to rely completely on charts, they represent only an afterthought of happened impulse but not about what will happen next.
For me anything that moved low to 20% from its previous high is dip and anything that moved 10% high from its previous low is moon. We have to understand price movements are between two indefinite numerical, but the range of these numerical rebounds between 1 to 20% is what all determines the trade.
In trade, we generally face two types of problems, presumption of a price that fails or lack of funds as we are caught up in a web neither able to sell nor able to buy, then how can we address this to an extent?
Let me give you a personal strategy. To illustrate some hypothetical cases, I have an investment size of 50k and I want to buy Tron expecting it to go up, let us take presently Tron is trading at Rs. 5.
Case Study – 1:
Purchased TRX = 10000 @ Price = Rs. 5
Current Price = Rs. 4.7,
Remark: If Sold, Loss = Rs. 3000
Case Study – 2:
Purchased TRX = 6000 @ Price = Rs. 5
Purchased TRX = 4000 @ Price = Rs. 4.7
Remark: Not putting all money at one point meant having enough capital to buy a dip.
If sold Loss = Rs. 1800
Case Study – 3:
Purchased TRX = 6000 @ Price = Rs. 5
Sold TRX at Stop Loss of Rs. 4.9
Buy Back 2000 TRX @ Rs. 4.8
Buy Back 2000 TRX @ Rs. 4.7
Remark: Exit with appropriate stop loss to rebuy the capital and minimise or negate the losses.
What does this signify?
We never know the way markets behave, and if they behave the way intended then there is nothing to worry but a strategy to combat a fall and escape is far more significant like case study 3. Even a slightest upward movement after a major dip could not only square off losses but could see us in minor profits averting a major loss.
What is a Moon to me?
Coming to the core of my topic and as the title suggests, drawing from history and rare Tsunami, we enter the markets with a notion that what is reaped today is going to be a golden goose tomorrow, and expect BTC to touch $20k everyday and still add on. The moon is not about expecting unnatural highs but trying to be successful on each and every trade that we execute.
We are just price centric than value centric, this is what jeopardises our trading techniques. You do not need a doctor when you are healthy but make sure you are not cordoned by this moon concept on everyday trade price and eventually hate the system itself.
We all as crypto lovers, if you are provoked by a right thought process, reward is bound to come and do not rely on astrology/numerology or all the influencers on various media.
Everything we hear is an opinion and not a fact and everything we see is a perspective and not the truth, so believe what is true to your private heart—Happy Trading.
Disclaimer: The views are of the author and does not necessarily reflect the views of Coin Crunch India. The article is not an investment advise. The article is edited by Chaitali Gursahani, guest contributor to Coin Crunch India.
About the Author:
The Author has worked in the US Healthcare Documentation with a team of 400 members for 16 years before coming back to India and developing an interest in cryptocurrency and blockchain. The author who wishes to be identified as Kumar can be reached on twitter @Ksanakkayala